With a short term business loan, businesses borrow a set amount of money upfront and pay it back, with interest, at regular intervals. As the name suggests, payment terms are shorter than long term loans and usually range from 3 to 18 months. For instance, the majority of Sail’s loans are repaid over six months.
The main difference between a short term loan and its longer counterpart is that a short term loan can be either secured or unsecured. There are pros and cons to both options. You’ll benefit from lower interest rates with a secured loan, but will not have to put up any collateral with an unsecured loan.
Short-term funding provides a quick, flexible way to get the money your business needs. Applications can be completed in just a few minutes and approved instantly, with funding in your bank account in as few as 24 hours. Plus, with online or alternative lenders, you will enjoy an easier application process that fits in with your cyclical working capital needs.
The answer to this question depends heavily on whether you’re applying for a secured or unsecured loan. With an unsecured short term loan, you may be able to borrow anywhere from $5,000 to 250,000 while a larger amount is likely possible with a secured loan.
There are two ways a lender might calculate the interest on your loan. Some might use a fixed interest rate while others use a factor rate. Factor rates usually vary from 1.1 to 1.5 and depend on the length of time you’ve been in business, your industry, average monthly sales and more.
Your loan might also depend on your repayment schedule. Some lenders may offer a weekly or monthly repayment while others take repayments out daily. If you’re not sure how much you can borrow, you can try our free loan calculator to review your options.
There are many reasons why a business would choose to apply for a short term loan, depending on their financial position, growth plans and the market opportunity.
Here are a few common scenarios in which a short term loan might be useful:
Make sure you understand what information is required of you to apply. Preparing the necessary paperwork in advance of applying will help streamline the application process.You may be asked to provide the following:
Did you know Sail is one of the only direct lenders that allows you to repay your short term business loan early with no fees or penalty? Although we offer repayment periods between 3-12 months, the majority of our loans occur over 6 months, allowing small businesses to quickly access the capital they deserve to continue thriving.
Our short term loan application process can be done online within just minutes, plus once approved, you can expect to receive your funds the following business day.
Still not sure if a business line of credit is right for you? Compare other types of loans to learn more.
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